Financial services firms optimistic for remainder of the year despite dip in output
Financial services activity dipped in the third quarter but firms were hopeful that volumes would pick up again in the last quarter of the year.
According to the Confederation of British Industry’s (CBI) financial services survey, the balance of financial services firm reporting a rise in output versus a fall was 27 per cent.
While this was down from 42 per cent the quarter before, it was significantly higher than the long-run average of 13 per cent.
Looking forward, 41 per cent of firms expected business volumes to pick up over the next quarter.
Louise Hellem, CBI chief economist said: “It’s great to see financial services firms reporting another positive quarter, with optimism and volumes growth both firm, and activity expected to pick up further in the months ahead. “
Hellem said the sector could record a stronger quarter if the government is able to improve regulation of the sector in its Autumn Statement.
“The government should look to build on this positive momentum by maximising financial services regulation as a lever for broader economic growth,” she said.
The government is consulting on a package of proposals, the Edinburgh Reforms, which the sector hopes will help turbocharge growth in the sector.
The reforms, announced by the government in December last year, are designed to “unlock investment and turbocharge growth” by repealing “burdensome pieces of retained EU law”.
Although firms are optimistic about their future, there was cause for concern as eight per cent of firms saw an increase in the value of non-performing loans over the previous quarter. Firms expect this to decline again over the next three months.